Sample Questions for Midterm 1
1. (Answer: C)
The price of peanut butter rises due to a poor peanut harvest; peanut butter and jam
are complements. What happens to the equilibrium quantity and price of jam?
a) Equilibrium price falls, equilibrium quantity
Basic Budget Constraints and Indifference Curve Questions
If the consumers budget constraint is given by 10F + 5S = 100 where F is food and S is shelter,
how much food can she buy if she purchases 2 units of shelter?
a. 10 b. 5 c. 20 d. 9 e. Non
Sample Questions for Midterm 2
1. (Answer: A)
The production function, Q = mincfw_K^2, L^2, has:
a. Increasing returns to scale.
b. Decreasing returns to scale.
c. Constant returns to scale.
d. It depends on the values of K and L.
e. It is impossible to c
An Engel curve
a. Always slopes up for an inferior good.
b. Always slopes down for an inferior good.
c. May slope up or down for a normal good.
d. Does not relate to the concepts of normal and inferior goods.
The vertical distance between the average variable cost and average total cost curves:
a. Is everywhere equal to total fixed costs.
b. Is everywhere equal to marginal cost.
c. Increases as quantity increases.
d. Decreases as
You have to decide whether to drive your car to school or to
walk. Each person has a cost to walking given by ci (the i subscript is denoting person
i) which is uniform on [0, 100]. There is no congestion when walking.
Supply and Demand Questions
A war in the Middle East reduces the supply of oil and causes the price of oil to rise.
What would we expect to happen to the demand for automobile tires?
a. The demand for automobile tires will shift right.
b. The d
Asymmetric Information Questions
When there is adverse selection in a particular market:
a. The trading partners you are likely to encounter are more likely to have undesirable
b. The trading partners you are likely to encounter
Utility and Optimization Questions
You have just emerged from university with a debt service burden of $25,000 per year (i.e. you
have to pay back 25,000 in one year to the bank), and have gotten a job with flexible working
hours. You have to de
Sample Questions for Midterm 3
Software development is a costly process, involving the time
of numerous programmers and testers. But actually making the software CDs is
virtually costless, as cheap machines can churn them out by the millions. It fo
Sample Final Questions
1. (Answer: C)
Martin consumes only chocolate and crisps. At his current consumption bundle, he is willing to give up
three bars of chocolate for one packet of crisps. Chocolate costs $0.30 per bar, whereas crisps cost